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Market Advisor: What’s Ahead for 2007 Lamb Prices

Slaughter lamb prices in the northern Plains likely will be stronger in the second quarter.

By Tim Petry, Livestock Marketing Economist

NDSU Extension Service

Slaughter lamb prices in the northern Plains likely will be stronger in the second quarter of 2007 than they were last year at the same time. Prices in the last half of 2007 should average near last year’s prices and follow normal seasonal price patterns.

Feeder lamb prices are being negatively affected by sharply higher corn prices than last year, but still should average near last year’s levels unless corn prices substantially increase over current levels.

2006 was a real roller-coaster ride for lamb prices. Slaughter lamb prices in the northern Plains averaged between $80 and $85 per hundredweight (cwt) in January and February, but declined sharply in March and April to $65.

The major factor affecting that price decline was a backlog of heavy-weight lambs that actually began in the fall of 2005. Federally inspected sheep and lamb slaughter weights averaged 147 pounds in March 2006, compared with 140 pounds the previous year. Furthermore, lamb imports were 13 percent above year earlier levels in the first quarter of 2006.

In May and June, both lamb weights and imports significantly declined and prices rebounded to $95 cwt during June through September. Prices declined seasonally to average about $90 in the fourth quarter.

Slaughter lamb prices in 2007 have averaged about $5 cwt higher than last year. Heavy- weight lambs have not been a problem and the sharp decline in prices that occurred last year is not expected.

Prices will be supported as demand for the spring religious holiday season ramps up, coupled with a smaller number of available lambs.

The latest USDA National Agricultural Statistics Service (NASS) sheep and goats report indicated that the number of market lambs on Jan. 1, 2007, was 1.48 million head, down 2.5 percent from the 1.51 million the previous year.

The report also showed that the total inventory of sheep and lambs on Jan. 1 declined slightly after increasing the two previous years. There were 6.19 million head in 2007, compared with 6.23 million in 2006, which was a decline of less than 1 percent. Dry weather in the southern, central and northern Plains likely contributed to the decline.

Texas experienced very dry conditions and is the leading lamb-producing state. Other Plains states where drought was evident also are important in lamb production.

The number of ewes 1 year and older increased more than 1 percent; from 3.66 million head in 2006 to 3.71 million in 2007. This was the result of a relatively large number of replacement ewe lambs that were retained in 2005 and 2006. Retention was popular because of strong prices in 2005 and the USDA Lamb Retention Program, which provided a monetary incentive to producers for keeping ewe lambs for breeding purposes.

Despite higher ewe numbers, the 2006 lamb crop was slightly lower. NASS pegged the 2006 lamb crop at 4.09 million head, compared with 4.12 million in 2005. Fewer lambs per ewe, 112 per 100 ewes in 2006 compared with 115 in 2005, was the reason that the lamb crop declined. Again, drought conditions in the Plains were an important factor in the decline. Texas declined 11 percent, Nebraska 17 percent and Oklahoma 23 percent.

The number of replacement lambs in 2007 declined about 8 percent, compared with historical high levels in the previous two years. Lower numbers were influenced by the drought, no incentive program and possibly the lower spring prices in 2006.

Total sheep and lamb numbers in North Dakota fell from 104,000 head in 2006 to 100,000 head in 2007. However, breeding sheep numbers increased from 76,000 to 78,000, so more lambs are expected in 2007.

The number of market lambs in North Dakota fell from 28,000 head in 2006 to 22,000 in 2007. Extremely dry conditions that reduced pasture and hay production in the south-central and southwestern parts of the states, coupled with sharply higher corn prices, contributed to some lambs leaving the state earlier than last year.

In neighboring states, breeding sheep numbers increased 5,000 head in South Dakota, but declined 5,000 head in Minnesota and Montana.


NDSU Agriculture Communication

Source:Tim Petry, (701) 231-7469, tim.petry@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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